A.D.(M.A. Series) Circular No.33 September 5, 1998 RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
To,
All Authorised Dealers in Foreign Exchange
Dear Sir,
Amendments to Exchange Control Manual (ECM)
It has been decided to amend/modify Exchange Control regulations as set out in the following paragraphs:
1. Authorised dealers in foreign exchange
In terms of Section 6 of the Foreign Exchange Regulation Act, 1973, Reserve Bank has granted a licence to Bank Muscat International S.A.O.G., to deal in foreign exchange. The bank has been permitted to undertake all types of foreign exchange transactions subject to the conditions and obligations enjoined upon authorised dealers in the Exchange Control Manual and other directions issued by Reserve Bank from time to time under Section 73(3) of the Act, ibid.
2. Advance Payment for imports - bank guarantee
In terms of paragraph 7A.10 of Chapter 7 of ECM (1993 Edition), authorised dealers have been permitted to make advance remittance for import of goods into India provided, inter alia, that in case the amount of advance remittance exceeds U.S.$ 15,000 or its equivalent, a guarantee from an international bank of repute situated outside India should be obtained. It is clarified that advance remittance as above may also be made against the guarantee of an authorised dealer in India provided such a guarantee is issued against a counter-guarantee of an international bank of repute situated outside India. The other conditions mentioned in the paragraph referred to above remain unchanged.
Slip 1[AD/MA 33/98] 7A.10(d If the amount of advance remittance exceeds U.S.$ 15,000 or its equivalent, a guarantee from an international bank of repute situated outside India or a guarantee of an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, should be obtained.
3. Loans/Overdrafts to Residents against thesecurity of NRI (Fixed Deposit) Accounts
In terms of paragraph 13B.10 of ECM authorised dealers have been permitted to grant loans/overdrafts to resident individuals/firms/companies in India against the collateral of fixed deposits in NRE accounts subject to the conditions mentioned therein. It has now been decided to allow authorised dealers to grant any type of fund based and/or non-fund based facilities to residents against the collateral of fixed deposits in NRE accounts subject to the conditions referred to in the said paragraph.
4. The following consequential amendments may be carried out in the Exchange Control Manual - Volume I.
i) The name of Bank Muscat International S.A.O.G. may be inserted after the name of Bank of Maharashtra in part A of Annexure to Chapter 1 of ECM.
ii) Paragraph 7A.10(d) may be replaced by Slip 1.
iii) The words 'Authorised dealers may grant loans/overdrafts' appearing in the first line of paragraph 13B.10 of ECM may be replaced by the words 'Authorised dealers may grant any type of fund based and/or non-fund based facilities'.
6. Authorised dealers may bring the contents of this circular to the notice of their constituents concerned.
7. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.
Yours faithfully,
KHIZER AHMED
Chief General Manager
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